Tuesday, May 12, 2009

The Internet and the economy force retailers to re-think the experience

I've run across a few articles in the last week or so that point to a "new" trend in bricks-and-mortar retail: focus on the experience. Now, "new" is in quotes, since obviously a lot of good retailers have been doing exactly that for a long time -- just look at FAO Schwarz, Trader Joe's, or most recently, Apple. However, for many retailers, experience was put aside when Internet upstarts suddenly made price the number-one feature of the marketplace. While it was always important in the past, the Internet's ability to conduct real-time price investigation persuaded less-savvy real-world retailers to chop off anything and everything in the name of lower costs.

It seems like some retailers are finally starting to realize that they can never win that way. Case in point:

The Brand Experience Labs notes Toys 'R' Us is pushing the retail concept further, though in a decidedly downmarket way: "Toys "R" Us is looking to give shoppers a reason to visit its stores more frequently with the rollout of the "R" Market store-within-a-store concept that provides a wide range of kid-focused products including diapers, infant formula, baby food, lunchbox items, paper goods, health and beauty items, household cleaners and more. Each "R" Market will feature roughly 1,300 items in a convenient shopping format located at the front of Toys "R" Us stores. The chain currently has "R" Markets in 260 stores with plans to roll the concept out to all of its 585 locations in the U.S. this year."

On the one hand, moving high-demand items to the front of the store may make it more likely that parents duck in for a quick purchase without having to commit to an hour of walking up and down aisles -- more if there are kids in tow. On the other, though, as BEL notes, taking the "grocery" approach might backfire for TRU, who have counted in the past on their image as the largest toy store chain to capture the imaginations of children and parents alike.

Likewise, Target just today announced that they too are trying out a new bricks-and-mortar retail approach that sounds surprisingly like Toys 'R' Us's. As Mediapost notes (via the WSJ), "Target is transforming a corner of a hundred of its discount department stores into mini-groceries stores that carry a narrow selection of products from 90% of the food categories found in a larger grocery store, Ann Zimmerman reports. It may eventually add mini-groceries to most of its 1,300 outlets as the key to its strategy to reverse declining sales." While grocery never faced the same threat online as dry goods and durables (with the brief exception the PeaPod experiment, which, a billion dollars later proved to be completely non-viable), Target and others have found it increasingly difficult to play the price game. As convenience has been something that people have consistently demonstrated their willingness to pay for, it seems like an obvious place for Target to focus on.

If companies like Target and TRU are experimenting with new ways to stand out from their competitors on- and offline (but especially on), it shouldn't be long before we start to see others do the same. After all, online-only retailers and Walmart can't wind up doing all the business, right?

1 comment:

The Merchant Maven said...

Interesting post!

I remember the old days before the internet had really taken hold...the 1990's! I was a shopping mall marketing director for the Macerich Company. Creating "the shopper experience" within stores and malls was all the rage. It still applies today, but oh how the internet has made us rethink everything.

The Merchant Maven